I recently discovered I was a dual citizen, and have always lived in Canada. I'm trying to get caught up on my taxes before I move to the States later this year.
I'm trying to fill out my 1040, and I'm wondering how to treat contract work (I was a research assistant, in addition to working as an employee for a university). In Canada, the income in box 48 was treated self-employment income I believe.
Can I include the gross income in line 7 along with my salary? It is a negligible amount, less than $1000. Or should I include it as self-employment income and list my expenses as $0 on schedule C-EZ?
Thanks for any help in advance.
Dual Citizen living in Canada: "fee for services"
Moderator: Mark T Serbinski CA CPA
It is self-employment income. You will need to show IRS that you do not have to pay SE tax (US SS and medicare) since you are covered in canada. Service canada will issue a certificate of compliance.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
Thanks.
Another follow-up question: I would argue that this activity is "sporadic": it was about 40 hours of work of the course of two weeks. I noticed in the instructions for schedule C, that for the income to qualify as business income: "you are involved in the activity with continuity and regularity". Thoughts?
Can I not submit it as other income, on line 21 of my 1040 and circumvent schedule C & SE?
Another follow-up question: I would argue that this activity is "sporadic": it was about 40 hours of work of the course of two weeks. I noticed in the instructions for schedule C, that for the income to qualify as business income: "you are involved in the activity with continuity and regularity". Thoughts?
Can I not submit it as other income, on line 21 of my 1040 and circumvent schedule C & SE?
I thought I'd post an update, in case anybody stumbles on this thread with the same issue I have here. I've found this forum very helpful re TFSAs and RPPs, so why not.
Initially I decided to fill out schedule C & SE; fairly straightforward, but it means I owe $100 unless I can show I paid into CPP/EI. I called the CRA about form CPT56 to show that I have; but it turns out since I submitted my "fee for services" income as other income on my Canadian return, I haven't paid CPP for that portion and I can't get the certificate of compliance.
Instead, I listed this "fee for services" amount on line 21 of my 1040, but I was stumped as to how I would do that since my foreign earned income exclusion amount should also be listed on that line. I ended up attaching a statement with the items listed. Also, I ended up having to use form 2555 instead of 2555-EZ so I could properly list the fee for services income as "other income". I argued that the work was done out of interest, since I did not expect to be paid but rather the person I worked with insisted that she pay me. Also, the work was not continuous or regular. I had a harder time explaining the rationale behind the latter argument, but I'm hoping the the fact that I did not research with the intent to produce income is enough.
Also, there have been some legal cases that set precedent in the past (e.g. "An assistant professor coauthored a book without any obligation to later work on revisions. The fact that she did revise the textbook five years later did not matter (Langford v. Commissioner, TC Memo 1988-300)."), so I am confident I was not self-employed.
Hopefully that all works out!
Initially I decided to fill out schedule C & SE; fairly straightforward, but it means I owe $100 unless I can show I paid into CPP/EI. I called the CRA about form CPT56 to show that I have; but it turns out since I submitted my "fee for services" income as other income on my Canadian return, I haven't paid CPP for that portion and I can't get the certificate of compliance.
Instead, I listed this "fee for services" amount on line 21 of my 1040, but I was stumped as to how I would do that since my foreign earned income exclusion amount should also be listed on that line. I ended up attaching a statement with the items listed. Also, I ended up having to use form 2555 instead of 2555-EZ so I could properly list the fee for services income as "other income". I argued that the work was done out of interest, since I did not expect to be paid but rather the person I worked with insisted that she pay me. Also, the work was not continuous or regular. I had a harder time explaining the rationale behind the latter argument, but I'm hoping the the fact that I did not research with the intent to produce income is enough.
Also, there have been some legal cases that set precedent in the past (e.g. "An assistant professor coauthored a book without any obligation to later work on revisions. The fact that she did revise the textbook five years later did not matter (Langford v. Commissioner, TC Memo 1988-300)."), so I am confident I was not self-employed.
Hopefully that all works out!
all this is what you "propose" to do, so i would 't be offering it as tried-and-true.
I have a tough time believing that you went from thinking this was wages, to calling CRA for compliance, to preparing an elaborate 2555 "explantion" in 6 hours.
I have a tough time believing that you went from thinking this was wages, to calling CRA for compliance, to preparing an elaborate 2555 "explantion" in 6 hours.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best